industry

Some important terminology

Agglomeration: The concentration of different parts of the same industry in one area, which has many advantages including lowering transport costs and easing access to each part.

Brownfield sites: Reclaimed industrial or residential land that is cleared and made available for development.

Capital: The money invested in companies to allow them to start production.

Communications: An all-encompassing word for all transport methods as well as phone, fax and e-mail.

Footloose industry: An industry that is not tied to a location by its need for raw material.

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Some important terminology

Greenfield sites: Rural land, often just outside cities, that is cleared and used for industry, often Science and Business Parks.

Labour: The workforce.

Market: Where the company will sell its product. The market for many large companies nowadays is the entire world.

Multi-national companies: Large corporations, with their headquarters in a developed country, who have factories in countries all over the world. This gives them access to cheap labour, cheap land and the world market.

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The systems model for industry

Inputs can be divided into two groups. Physical inputs are naturally occurring things such as water, raw materials and the land.

Human or Cultural Inputs are things like money, labour, and skills.

Processes or Throughputs are the actions within the industry that change the raw materials into the finished product. For instance, all the processes needed to change pieces of wood into a chair.

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The systems model for industry

Outputs can be negative or positive, although they are usually the latter. Negative outputs include waste products, suchas off-cuts. The positive outputs are the finished product and the money gained from the sale of that product.

Feedback is what is put back into the system.

The main two examples of this are money, from the sale of the finished product, and knowledge, gained from the whole manufacturing process. This knowledge could then be used to make the product better of improve the efficiency of the processes.

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The example of the car industry

A very good example of an industrial system is the car manufacturing industry, like the Rover factory at Longbridge in Birmingham.

This is actually more of an assembly industry as most of the parts are made elsewhere and then brought to Longbridge to be put together.

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Primary, secondary, tertiary and quaternary indust

Industry can be classified using a four-way division. Over time, the percentage of the population of a country working in these different sectors of industry will change as the country develops. This is covered in the 'Employment structures' section.

- Primary industries are classified as those which produce the raw materials for industry. Examples include mining, quarrying, farming, fishing and forestry, all of which produce raw materials that can be processed in to a finished product. People working in these industries are described as being in the primary sector.

- Secondary industries are the manufacturing and assembly industries. They take raw materials and manufacture finished products from them. Examples include steel manufacture, bread making and food processing. People working in these industries are described as being in the secondary sector.

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Primary, secondary, tertiary and quaternary indust

- Tertiary industries are service industries, and are the area of most growth in the United Kingdom. Examples include doctors, teachers, lawyers, estate agents, travel agents, accountants and policemen. People working in these industries are described as being in the tertiary sector.

- Quaternary industries are the newest, most hi-tech sector of industry. They are the research and development industries. Examples include the development of new computer components and research into GM crops. People working in these industries are described as being in the quaternary sector.

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Employment structures

You can use the percentage of people working in each sector to help describe how developed a country is. This is called the employment structure. By looking back through history you can also see how one single country has developed by looking at the changes in their employment structure.

The more developed a country becomes the more it will rely on secondary and, in particular, tertiary industries. A less developed country will be characterised by a greater percentage of the population in primary industries, usually farming.

Ethiopia=Primary: 88%; Secondary: 2%; Tertiary: 10%; Quaternary:0%

Ethiopia is a typical example of a developing country, in terms of its employment structure. The majority of the population work in the primary sector. Most of these are subsistence farmers, who basically grow enough for themselves and their family, but little more. They don't have a great deal, if any, left over to sell at the market.

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United Kingdom

UK =Primary: 3%; Secondary: 25%; Tertiary: 70%; Quaternary: 2%

The United Kingdom exhibits the employment structure of a well-developed country. The number of people working in the primary sector has steadily decreased as mines have closed and technology has meant fewer people are required.

The number of people working in the secondary sector is still reasonably high, but has also been falling steadily as new, more efficient technology has again meant less people being needed.

The massive growth has been in the tertiary sector, where huge numbers of jobs have been created. This is not just in the traditional tertiary industries like teaching and health care, but also in the tourist industry, the computer industry and the financial industry.

There has also been the introduction of the quaternary sector, although this still takes up a very small percentage of the overall employment structure of the country.

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Factors influencing industrial location

Many factors influence the location of industry. Initially, in the United Kingdom industry was fairly closely tied to where the raw materials were, in particular coal for power.

Nowadays, the change from heavy industry to light, footloose industry, has meant that industries can locate anywhere and so other factors, such as communications links and government policy, become far more important.

A general rule is that the physical factors were the primary influence over the location of the old industries in Britain,whilst the economic ones are increasingly important in industrial location now.

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Physical factors

Accessibility: The site of the new factor needs to be accessible, so that importing of raw materials and exporting of finished products is easy.

Climate: The climate could affect where an industry locates, as it needs to attract workers to the area. This is not a particularly important factor.

Land: The site of an industry is very important. Usually, flat land is the most essential thing to find. Most industries alsotry to find areas where there is room to expand once production has become successful.

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Physical factors

Raw Materials: Old, heavy industry required large amounts of bulky raw materials, which were very costly to transport, and so the industry located close to them. Newer industries are described as being footloose, as they are not tied by being near raw materials, which are smaller and easier to transport.

Power: Initially, industry had to locate right beside its power source. Water power was used at first, and then the burning of coal produced steam power. Both sources of energy restricted where industries could locate, as they had to be beside a suitable river or near the coal field.

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Socio-economic factors

Capital: Very important to any industry. Companies cannot set up their chosen industry without investment of money. This may come from private sources or from the government.

Communications: Probably the most important factor for new industries nowadays. Most need communications links not only to the rest of the country, but to the rest of Europe and the World. Transport routes such as the motorways, airports, railways and the ports are all things that will attract industrial location.

Government policy: Governments can greatly influence the location of industry, by giving tax incentives, cheap rent and other benefits to companies locating in certain areas of the country. Often these are places, which the government wants to develop economically. Government policy also lead to the closure of many of the heavy industries in the United Kingdom, such as numerous coal mines and ship building yards.

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Socio-economic factors

Labour Supply: Very important to old, labour-intensive industries. This is why many of them located in the inner cities, so that there was a huge pool of potential workers close by. With the growth in car ownership, and industries becoming more mechanised labour supply is not such an important factor for most industries. However, some industries rely on it.

Markets: Access to markets is vital, and this ties in with the section on communications. In the last 19th Century the market for most industries would be fairly local. Into the 20th century the market widened with improved transport technology. Now, the market for many companies is a global one.

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Manufacturing industry: South Wales

South Wales has experienced both growth and decline as an industrial area.

During the 19th Century Southern Wales became a vitally important industrial area, for both iron and steel production. The steep valleys, with their fast flowing rivers, provided power and transport. The hills were rich with raw materials, such as coal, iron ore and limestone, and the area was close to the ports of Cardiff and Swansea.

In 1860 there were over 30 iron works in the valleys of South Wales. They provided vital employment for the local villages, which became almost solely dependent on the new industries.

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Manufacturing industry: South Wales

During the next 40 years improvements in the smelting process, meant that the production of iron was replaced by steel manufacture, which was more profitable.The natural resources needed were the same.

By the 1990's only two steelworks were left in South Wales, and both of them were on the coast. The resources had run out, only one coal-mine remained working and the many small works in the valleys had closed down, causing huge social problems.

The new works were integrated steel works, which imported their raw materials from abroad. These aimed to make the industry more efficient and competitive in a growing world market. Not only is there competition form other countries but also form other materials that are increasingly being used instead of steel. Materials, such as aluminium and plastics.

An example of one is the integrated steel works at Port Talbot. Opened in 1954, it is an integrated steelworks, which is one in which all processes of the steel making industry occur under one roof.

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Manufacturing industry: South Wales

The coal and iron ore deposits of South Wales have long since run out or become too costly to get at, so both of these raw materials are imported from places such as Africa and South America.

Port Talbot has many locational advantages. There is a large area of flat land, near to the sea for importing and exporting purposes. Near by is a large workforce and access to the entire British market through the excellent motorway links. It has created employment opportunities in the area, and has encouraged further investment and growth.

South Wales is experiencing something of a recovery again, thanks to being at one end of the M4 Corridor. Industrial Parks have been established outside of the main cities, to benefit from the large workforce,good transport links and available land.

There have also been government grants and loans made available to encourage industrial location in the area. Companies such as Sony, Bosch and Toyota have all re-located to South Wales.

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Hi-tech industry: The M4 Corridor

New industrial regions in Britain have tended to grow up along main communication routes. The best example of this is the "Sunrise *****", which takes in the area around motorways such as the M11, M23, M3 and, most importantly, the M4.These industries are described as being footloose. They have generally grown up over the last 25 years in "growth areas", along communications routes. Although they do bring prosperity to regions, the new industries actually employ few people in comparison to the older, declining, heavy industries. Traditional location factors have been super-seeded by newer ones.

As access to raw materials is relatively unimportant nowadays, location, although dominated by communications considerations, also can increasingly take into account the social needs of its employees. Thus climatic, scenic, health and entertainment factors have to be included. In turn the industries try to locate near to places where a skilled workforce could be employed, such as around the university towns of Oxford or Cambridge.

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Sunrise ***** locational advantages

The motorway system, which allows easy access to all parts of the United Kingdom.

Easy access, via the roads, to the Channel Tunnel and ports to allow export abroad.

The close proximity of Heathrow, Gatwick, Stanstead and Luton airports, all of which could be used to export products.

The skilled workforce found in university towns of Oxford, Cambridge, Reading and Bristol.

Close proximity and good access to London, where the major government functions and financial trading occurs.

The concentration of other industries means that ideas and knowledge could be shared, there will be a concentration of suitable skilled labour and transport costs may be reduced between agglomerated industries.

A very attractive natural environment, which would provide a very pleasant place to live for the workers. Areas such as the Cotswolds and the Mendip Hills are in easy reach of the Sunrise *****.

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Science Parks: Cambridge

The first Science Park was established on the west coast of the United States near to Stanford University in the 1940's.

The first one established in the United Kingdom was outside Edinburgh in 1971. Now there are many dotted around the country that all share specific characteristics that sets them aside from the normal industrial estate.

Science Parks are areas of industry that have grown up on Greenfield sites outside of major cities around the world. The land is less costly than in the cities and the access to transport routes is a prime consideration in their location. Often, Science Parks have a large amount of green land to try to make it as pleasant a working environment as possible.

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Science Parks: Cambridge

Business Parks are very similar, however Science Parks have one other thing that sets them apart. They usually have very close links to a major research institution, probably a university. In Britain a very good example is the Cambridge Science Park.

Cambridge is a perfect location for the types of hi-tech, often quaternary industries that locate there. The M11 offers a very quick route to London and beyond. Stanstead airport is 30 minutes down the motorway. There are close links with the university, allowing researchers from there to work in tandem with researchers from the companies of the Science Park. Much of the work is research and development in areas such as pharmaceuticals and micro-electronics.

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Industry in Europe: The Ruhr Valley

The Ruhr Valley is the industrial heartland of Europe. It is located on the western side of Germany and encompasses large cities such as Dortmund and Dusseldorf. During the Second World War it was one of the prime targets for the Allied Forces.

The region is served by two of Europe's largest rivers, the Ruhr and the Rhine. These allowed the region to develop as they initially provided power,as well as transport, which is still used today. Huge barges travel along the River Rhine loaded with raw materials or the produce of the Ruhr Valley industries.

Its central location makes it a perfect place for industry, as export to the whole of Europe is very easy. The many local cities mean that there is a huge workforce in the area.

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Industry in Europe: The Ruhr Valley

Natural resources occur in abundance. These were the main reason forthe industry locating here in the first place. There are huge deposits of coal, which powered the heavy industries.

The Ruhr Valley is primarily an area of heavy manufacturing industry, such as steel manufacture, chemical production and engineering. Over the past half century the car manufacture industry has also grown massively in the area, as well as food processing and oil refining.

However, with the natural resources slowly declining, there has had to have been a move towards more hi-tech industries locating in the area. This has helped the area, however there is still a problem of unemployment due to the traditional industries, upon which the area relies so heavily, having to become more mechanised and efficient.

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Newly industrialised countries: South Korea

There are a number of countries around the world that can be accurately described as Newly Industrialised Countries (NIC's). They all share the same characteristics, and one of the best examples is South Korea.

South Korea is one of the countries in south-east Asia described as being part of the Tiger Economies. The others are Taiwan, Singapore and Hong Kong. NIC's share the characteristics of being:

An increasing exporter to the world market, usually by copying existing products and then re-producing them for a much cheaper price.

Rapid growth in the manufacturing sector, which results in far more exports and a rapidly rising GDP.

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Newly industrialised countries: South Korea

Traditional society:

Most industry is labour intensive, concentrating on small cottage-style traditional industries, using local raw materials. Examples could include food processing or textile manufacture.

Often, the majority of people are still in the primary sector, doing things such as farming.

There is little technology and most people have very little money.

Most products are imported from abroad, meaning that the country is relying on other for many of its needs.

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Newly industrialised countries: South Korea

Import substitution industries:

The country decides to promote its own industries.

New companies copy products from well-known companies, and then make them for a far cheaper price.

The country operates a strict regime of trade tariffs and high taxes for any similar products being imported into the country. This is aimed at protecting their own companies whilst they grow.

Example industries are car manufacture, computer manufacture and the manufacture of other electrical goods, such as hi-fi's.

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Newly industrialised countries: South Korea

Export orientated industries:

Once the new companies have become established in their own country they are unleashed upon the world market.

These industries are now capital intensive, using high technology and aimed at making a big profit.

The GDP of the country starts to rocket, often growing at well over 5% per year, which is an amazing rate.

The country is now described as being an NIC.

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The impact of multi-national companies

Multi-national or Trans-national companies are ones which locate their factories throughout the world. This gives them many benefits, such as access to the world market, cheap labour, cheaper production costs, and therefore greater profits. The headquarters of the company remains in its original country, usually one of the most developed countries in the world, such as the UK or USA. They then have factories throughout the world, which either make parts or entire finished products for the company to sell on the world market.

Most of the largest multi-national companies are oil companies such as BP and Exxon (Esso), as well car companies (for example, Ford, Toyota, Nissan and Volkswagen). Other well-known companies such as Coca-Cola, IBM and Sony are also defined as being multi-national.

Multi-national companies locate around the world for their own benefit - in other words - to make as much money as possible. They bring with them both advantages and disadvantages for the country that plays host to them.

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The impact of multi-national companies

Investment:

Advantages: The companies bring much needed money into the country. Although most of their profits do return to the company's country of origin, the local economy does benefit.

Disadvantages: The wages paid to local workers are often low and some companies have been accused of exploiting the local workforce rather than benefiting it. There are often tax incentives for these companies to locate in countries in the Developing World. This added to the fact that they take most of their profits out of the country, means that the actual economic benefit to the country could be minimal.

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The impact of multi-national companies

Technology:

Advantages: The companies help the development of the country by bringing in technology and knowledge that the host country does not possess.

Disadvantages: Unless the company actively participates in a program to educate local companies in the new technologies, the country's industry will not really benefit. Multi-national companies might be worried by sharing too much information, as they could find themselves with increased competition from local companies.

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The impact of multi-national companies

Transport:

Advantages: The new companies often help to improve transport links around the area.

Disadvantages: The transport links that do receive financial help from the multi-nationals often only serve the direct routes and needs of that company, not the wider area as well.

Employment:

Advantages: They create jobs for the local population.

Disadvantages: Often the jobs are highly skilled and so the company brings in their own people to do them. Also, the technological nature of many of these companies means that there aren't as many jobs as there might have been.

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The impact of multi-national companies

Growth poles:

Advantages: The new multi-national companies act as growth poles for other similar companies. They could encourage more companies to locate in that country once they see the benefits that it brings.

Disadvantages: Only a limited range of companies find that moving to a Developing World location is beneficial. They will only move there if it makes economic sense for the country. They do not consider the potential benefits to the host country.

Disadvantages: Many multi-national companies have very poor records on pollution and worker safety. They have been accused of trying to cut corners with both safety and pollution in order to keep costs down.

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The impact of multi-national companies

Multi-national companies in Brazil:

Brazil has encouraged multi-national companies to locate in the industrial areas around the major cities of Rio de Janeiro, Belo Horizonte and Sao Paulo.

Excellent transport links to most places in the world have encouraged companies to locate in the area.

Companies such as Coca-Cola, Fiat and Volkswagen all have located in this area. There are plentiful natural resources, a large workforce and lots of suitable land for large-scale factories.

Large industrial areas have been specifically set up outside of these great cities for the companies to locate in.